Profit booking continues

Tue, 27 May Closing

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   01:30 pm   

Indian stocks continued to trade in a range bound manner during the final hour of trade. The BSE-Sensex closed lower by about 167 points or 0.7% today. The NSE-Niftyclosed lower by about 41 points or 0.6%. Stocks from the oil and gas and power sectors were the least favoured today, while those from the information technology and pharmaceutical spaces were in demand. The BSE Mid Cap and BSE Small Cap indices ended the day on a weak note, with the indices closing lower by about 0.7% and 0.5% respectively.

Stock markets in other parts of Asia ended the day on a mixed note with Japan ending higher by 0.2% while China and Hong Kong ended lower by 0.3% and 0.1% respectively. The rupee was trading at Rs 59.06 to the dollar at the time of writing.

Power stocks ended the day on a weak note with Lanco Infratech, JSW Energy and NHPC leading the pack of losers. PTC India announced its results for the quarter and year ended March 2014. The company reported a 30% YoY increase in revenues, while profits rose by a sharp 86% YoY during the quarter. As per the company, revenue growth was led by the increase in volumes across segments particularly long term trades which rose by 27% YoY to 1.7 bn units. As per the company, it is looking to tie-up about 11 GW of generation capacity on long-term basis by FY16, and is actively converting these into power-sale agreements. For the full year FY14, the company's revenues and profits grew by 31% YoY and 81% YoY respectively. Following the strong results coupled with the fact that stocks from the power sector have been in demand over the past few days on high expectations from the newly formed government, the stock of PTC is up by about 30% over the past two weeks. Today however, it ended lower by about 2%.

Stocks from the information technology and healthcare sectors have underperformed the broader markets over the past three months. While the BSE-IT Index is down by about 11.3%, the BSE-Healthcare index is down by about 5.5% over this period. Stocks of index heavyweights such as Infosys, TCS, Wipro, Sun Pharmaceuticals, and GSK Pharma have been less in favour for a while now. Given that their fundamentals have not changed substantially over the past few months, it does seem that this is more of a result of sentiments. While these sectors are usually considered as the defensive sectors, with the market behaving the way they have, it does seem that risk appetite for investors has made come back as stocks from all underperforming sectors have zoomed over the past few weeks. Nevertheless, readers are advised not to take hasty decisions in such times and rather look at the valuations from a long term perspective. Nevertheless, in the short term it does seem stocks from these spaces will continue to witnesses some volatility especially due to foreign investors looking to reshuffle their portfolios.